Strategic reviews, sales and spinoffs are trendy in Big Pharma these days. Now, the Danish drugmaker Novo Nordisk ($NVO) has joined the bunch. Novo says it's weighing an initial public offering for its IT subsidiary, NNIT, and has hired a new CFO for the unit to handle the review.
NNIT brought in about 2.2 billion kroner last year, or about $404 million, and external customers account for an increasing share of those sales, the company said. For 2014, that share is expected to be about 50%. That's one reason why Novo is looking at an IPO, according to NNIT's new CFO, Carsten Krogsgaard Thomsen.
The overall impetus? Similar to the motivation behind the strategic reviews at Novartis ($NVS), Merck ($MRK) and Pfizer ($PFE). Is the business better off under Novo's wing, or on its own? "Novo Nordisk has been very satisfied with NNIT's development," Novo CFO Jesper Brandgaard said in a statement. "Against that background we are considering whether a change of ownership structure could support value creation in NNIT and strengthen the company's market position both in Denmark and internationally."
Plus, IT services may be necessary to pharma companies, but the IT business and the drug business are entirely different beasts. One could argue that consumer health--which Novartis and Merck are both considering for disposal, possibly in a trade with each other--is complementary to prescription drugs. Not so with IT.
Logistically speaking, Novo is a step ahead: The drugmaker formally separated NNIT into an independent subsidiary back in 1998. It's currently a limited liability company 100% owned by Novo Nordisk, with Novo executives serving as chairman and vice chairman of its board. (Brandgaard himself is the chairman.) That independence makes an IPO easier.
But a successful IPO? That, of course, is what Thomsen is working to find out. Pfizer's big animal health spinoff, Zoetis ($ZTS), hit the market with a bang. The market was also receptive to AbbVie ($ABBV), the pharma business spun off by Abbott Laboratories ($ABT) last January. NNIT would be much smaller than either of those deals, of course, and targeting a different group of investors.
- read the NNIT release
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